Month: October 2019

U.S. Department of the Treasury Removes Sanctions on Turkish Ministries and Officials

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On October 23, 2019 the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) removed the Specially Designated National (“SDN”) designations on the Government of Turkey’s Ministries of National Defense and Energy, as well as the SDN designations on the Turkish Ministers of National Defense, Energy, and Interior.  On October 14, 2019, President Trump issued Executive Order 13894 authorizing the Secretary of the Treasury to designate the Government of Turkey, its officials, and foreign companies providing goods and services to SDNs under this E.O.  In addition, E.O. 13894 also imposed secondary sanctions prohibiting foreign (1) parties from engaging in certain Syria-related transactions and (2) banks from facilitating any transactions involving SDNs or activity in Syria.

As a result of OFAC’s de-listing of the Turkish Ministries and Ministers, U.S. and foreign parties are no longer prohibited from engaging in business with these parties.  Nonetheless, foreign forwarders are still prohibited from engaging in certain transactions related to operations in Northern Syria, as listed in E.O. 13894 § 2. 

Parenthetically, the removal of sanctions here was contingent on Turkey accepting a ceasefire in Northern Syria.  As has been evident in the news, this is a sensitive political situation and it is not clear to what extent the ceasefire will be successful.  Accordingly, as E.O. 13894 is still in effect, it is possible that OFAC may re-designate the Government of Turkey depending on the events over the next several weeks.

We hope this is helpful, but please contact Ed Greenberg (egreenberg@gkglaw.com) or Oliver Krischik (okrischik@gkglaw.com) if you have any questions.

Association 411: Don’t Let Your Office Halloween Party Turn Into a Nightmare

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Throwing an office Halloween party is a great way to boost employee morale and have fun with your colleagues.  However, if not handled properly, a Halloween party can create some scary legal and HR problems.  Below are a few guidelines to help ensure your party is an enjoyable event for all attendees:

  • (1) Create Costume Guidelines.  Remember that guy in school who always wore an outrageously offensive costume to the annual Halloween party?  You don’t want that guy showing up at your office party.  If you are having a costume party, make sure everyone is aware of the rules about costumes.  They can include:
    • All costumes should adhere to the company’s dress code policy.
    • Costumes should not include weapons (fake or real) of any kind.
    • Costumes should not be provocative or offensive. If you believe there is a chance that someone could be offended by an employee’s choice of costume, advise the employee not to wear it. 
    • Avoid political costumes.  It is best to avoid discussing politics in the workplace, as it is a very emotional topic for many Americans.   If a Donald Trump or Joe Biden shows up at your Halloween party, it may quickly turn into an antagonistic political debate.
    • Avoid religious costumes.  Religious costumes are always tricky.  If a person dresses up as a religious leader of a faith that is not their own, there is a risk people could assume that person is mocking their religious beliefs.  Additionally, dressing up as a sexy nun, devil or pope (yes, there actually is a sexy pope costume available on Amazon) will not only violate the company’s dress code, but will likely offend other employees.
    • Avoid controversial topics.  Don’t permit costumes that make light of tragedies or serious issues.  Costumes that perpetuate a cultural stereotype should also be prohibited.
  • (2) Prohibit Scare Tactics.  Remember how funny it was to jump out of the closet and scare your little brother on Halloween?  Unfortunately, that kind of behavior does not go over well in an office environment.  Inform your employees ahead of time that Halloween pranks will not be permitted.  You don’t want any employee to feel embarrassed, shamed or singled out because they were a target of some ridiculous prank instigated by a co-worker.
  • (3) Assess Safety Risks.  Carving pumpkins is a common activity at Halloween parties. However, many companies have switched to pumpkin painting to avoid worker’s compensation claims from cuts and injuries from pumpkin carving tools.  Additionally, most companies prohibit the use of candles to light up carved pumpkins.  
  • (4) To Drink or Not to Drink?  Having alcohol at work events is always risky.  If you do decide to serve alcohol, try instituting a one drink limit.
  • (5) Let Everyone Know that Participation is Not Mandatory.  There are many reasons that people might not want to participate in the Halloween party.  There are people who do not celebrate Halloween because it is a pagan holiday.  There are others who just don’t like wearing costumes.  Make it clear that everyone is welcome at the office Halloween party, but no one is required to attend.  Additionally, costumes should be optional, not mandatory.

Hopefully these guidelines will not take the fun out of your Halloween party plans.  Ultimately, you should make sure you are respectful of every employee’s beliefs and values when planning any type of work event.  By creating a safe and welcoming environment for your staff, you can boost morale and give employees a real opportunity to create positive relationships with their colleagues.   

GKG Law’s Keith Swirsky Speaks at the 2019 NBAA Tax, Regulatory and Risk Management Conference

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Keith Swirsky, President of GKG Law, gave a presentation entitled “Key Federal Tax Issues and Audits” at the 2019 NBAA Tax, Regulatory & Risk Management Conference held October 20 – 21, 2019 in Las Vegas, NV.  Keith was joined by Alan Burnett of CenterPoint Aviation PLLC to lead this educational session covering the federal tax planning issues most frequently dealt with in aircraft ownership and operations structuring and in federal tax audits. Topics included the “ordinary, necessary and reasonable” threshold test, eligibility for MACRS and bonus depreciation, the passive activity loss limitation rule, personal use of the corporate aircraft classifications and recordkeeping requirements. Audit defense strategies were also addressed.

Find more information on the NBAA Tax, Regulatory & Risk Management Conference here. 

New OFAC Sanctions on Turkey

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As you are likely aware, there has been recent news regarding the U.S. economic sanctions imposed on Turkey (i.e., the “Syria-related Sanctions”).  The Treasury’s press release is available here.  Based on our review of the new sanctions, here are some things to note for both US and foreign based forwarders that do business with Turkey.

  • The New Sanctions Are Not a Country-wide Embargo.  Unlike the embargoes on Crimea, Cuba, Iran, North Korea, and Syria, the new action constitutes a set of list-based primary and secondary sanctions.  This means that U.S. companies can still conduct Turkey-related business so long as no prohibited parties are involved.  Prohibited parties here will include parties that are (1) listed on the SDN list, (2) owned or controlled by parties on the SDN list, or (3) engaged in activity described in the Executive Order relating to destabilizing Syria and human rights abuses.
  • The New Action Includes Secondary Sanctions.  Under the Executive Order of Oct. 14, 2019 (the “E.O.”), foreign companies can be subject to restrictive measures up to and including full SDN designation and blocking if they engage in activity that violates the E.O., including transactions with newly designated Turkish government ministries.  Having said that, OFAC will likely focus on activities that support Turkey’s Syria-related activity or otherwise involve important operations for the Turkish Ministries of Defense and Energy.  In addition, foreign banks can be subject to a broad range of restrictive measures for facilitating transactions for parties or activities violating the E.O.  These restrictions apply regardless of whether any U.S. parties, funds, or goods are involved. 
  • OFAC Has Designated Certain Agencies and Officials of the Turkish Government.  OFAC’s designations are available here.  To date, OFAC has designated the following parties:
    • REPUBLIC OF TURKEY MINISTRY OF ENERGY AND NATURAL RESOURCES
    • REPUBLIC OF TURKEY MINISTRY OF NATIONAL DEFENCE
    • AKAR, Hulisi (Turkish Minister of National Defense)
    • DONMEZ, Fatih (Turkish Minister of Energy)
    • SOYLU, Suleyman (Turkish Minister of Interior)

These designations also apply to any entities in which the above SDNs have a majority ownership interest.  This applies even where the majority interest is indirect, such as through holding companies.  

  • OFAC Has Provided a Wind-Down General License.  General License 2 of the Syria-related Sanctions provides companies until November 13, 2019, to wind-down any operations or agreements with the Turkish Ministries of National Defense and Energy.  It is available here.  This wind-down period is applicable to both US and foreign entities.
  • OFAC Has Provided a General License for UN-Related Activities.  General License 3 allows companies to provide services related to the official business of the UN and its agencies, funds, programmes, and organizations.  General License 3 is available here.
  • The E.O. Allows OFAC To Designate Other Parts of the Turkish Government.  The E.O. provides broad language that allows OFAC to designate other parts of the Turkish government for any reason.  Depending on the political situation between the two countries, there may be additional designations of Turkish officials and agencies in the future.  

In short, as US forwarder’s obligations remain much the same.  It should screen any transactions for prohibited parties, which now include certain parts of the Turkish government.  Any ongoing projects with the Turkish Ministries of Defense or Energy should be wound down unless they involve official business of the U.S. government or UN.

Foreign forwarders and other foreign entities, on the other hand, are now subject to additional rules prohibiting them from engaging in certain Syria-related activity set forth in the E.O., which is available here (see Section 2(a)).  And, foreign companies violating these new sanctions can be designated as an SDN for providing services to the forbidden parts of the Turkish government.  Importantly, if a foreign forwarder is designated as an SDN, its US affiliate would be considered a blocked person as well.  

We hope this is helpful, but please contact Ed Greenberg (egreenberg@gkglaw.com) know if you have any questions.  

Bonus Depreciation Update / TCJA Update Provisions

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GKG Law's Keith Swirsky and Troy Rolf recently led a detailed webinar on the topic "Bonus Depreciation Update / TCJA Update Provisions." The webinar consisted of two parts: (i) Part 1 included an update regarding the availability of bonus depreciation and rules relating to the application of bonus depreciation in the context of an aircraft acquisition; (ii) Part 2 provided a detailed review of income tax rules under the 2017 Tax Cuts and Jobs Act including loss of investment expense deductions, loss of unreimbursed employee business expense deductions, and entertainment and commuting disallowance provisions. 

A full audio recording of the webinar can be accessed here: https://register.gotowebinar.com/recording/8144010461232673026.

 

PDF FileBonus Depreciation Update / TCJA Update Provisions

GKG Law Wins District Court Decision Affirming Summary Judgment in In re Containership Co.

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GKG Law recently prevailed on summary judgment in the United States District Court for the Southern District of New York against The Containership Company (“TCC” ) in a case involving claims in excess of $8 million. GKG Law serves as counsel for over 20 defendants in this litigation which began in 2011 after TCC filed for bankruptcy in Denmark and then filed 77 adversary proceedings against shippers in the Bankruptcy Court in the Southern District of New York. The adversary proceedings alleged breach of pre-petition service contracts and sought liquidated damages plus interest and attorneys’ fees.  The cases have spanned over eight years with GKG Law continuing to represent most of the defendants in the litigation, including through the bankruptcy court’s approval of summary judgment in 2016.  Many defendants opted to settle, but GKG Law encouraged our clients to continue litigation based on the strength of their defenses and in September 2019, the district court affirmed the bankruptcy court’s decision that TCC failed to provide service and breached contracts.  As a result of the district court’s decision, GKG Law’s  clients are not liable for the damages alleged by TCC.

GKG Law's Brendan Collins and Ed Greenberg serve as lead counsel for the firm's clients in this matter.

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